Taiwan Semiconductor Manufacturing Company, commonly referred to as TSMC and listed on the New York Stock Exchange under the ticker NYSE: TSM, has been experiencing a turbulent year in 2025. Despite starting the year with promising momentum, the company's shares have seen a significant decline of over one-third from their peak value reached on January 24. This downturn has raised concerns among investors and market analysts about the future performance of the tech giant.

The primary driver behind TSMC's stock pullback is the pervasive negativity affecting tech stocks, largely attributed to the tariffs imposed by the previous Trump administration. These tariffs are feared to escalate the manufacturing costs for technology firms that produce goods outside the United States. Consequently, this situation could lead to increased expenses when deploying artificial intelligence (AI) data centers, which may compel major tech corporations to tighten their budgets and limit spending on crucial projects.

Furthermore, the impact of these tariffs on manufacturing has broader implications for the U.S. economy, prompting fears of an impending recession. As these economic factors converge, they have placed considerable downward pressure on TSMC's stock performance throughout this year.

However, a deeper analysis of the company’s sales figures over the first two months of 2025 reveals a glimmer of hope for TSMC. Specifically, analysts believe that TSMC might regain its footing following the announcement of its first-quarter earnings report for 2025, which is scheduled for release on April 17. Such a report could potentially reflect a turnaround for the company.

Examining TSMC's sales growth, the company reported an impressive revenue increase of 39% in the first two months of 2025 compared to the same period the previous year. This robust growth trajectory suggests that TSMC is not only on track to meet but possibly exceed its own revenue projections for the first quarter.

When TSMC disclosed its fourth-quarter results for 2024 back in January, it provided a revenue guidance of $25.4 billion for Q1 2025 at the midpoint of its forecast range. This projection translates to a year-over-year increase of 34%, showcasing a substantial improvement over the mere 13% growth reported during the prior year’s first quarter. Given the strong performance in sales during January and February, there is a reasonable expectation that TSMC could outperform these forecasts.

In addition to projected revenue growth, TSMC’s earnings are also expected to reflect significant improvement. The company anticipates a year-over-year increase of 5.5 percentage points in its operating margin, which bodes well for its profitability. Analysts are optimistic, projecting a remarkable 49% increase in earnings for Q1 compared to the previous year, estimating earnings at around $2.05 per share. However, given the robust demand for AI chips, TSMC could potentially exceed these projections.

The surge in TSMC’s sales can largely be attributed to the skyrocketing demand for AI chips, which are becoming increasingly essential across various applications, including data centers, smartphones, personal computers (PCs), and automotive technologies. One of TSMC's primary clients, Nvidia, recently reported a record demand for its latest generation of Blackwell AI graphics processing units, further underscoring the burgeoning market for AI technology.